The word 'charity' does not describe an entity, but describes the status of an entity which is set up to meet certain defined eleemosynary objectives, and which having a public dimension falls to be regulated under the law and thereby attains certain exemptions from direct taxation. Such an entity can be any legal form, although it usually takes the form of a trust or a company limited by guarantee. Isle of Man Charity law essentially followed the English pattern with some minor differences up until the English Charities Act 2006, which is not being followed in the Isle of Man. Although entirely new legislation is anticipated eventually, taking account of the island’s status as an international finance centre and its zero rate direct taxation on companies, in the meantime the Charities Exemption Regulations 2008 have effectively introduced a special (and relaxed) regulatory regime for private funded charities. There exist now therefore two regulatory regimes; the first for ‘privately’ funded charities and the second for ‘publicly’ funded charities.

A private charity is defined as a charity where the funding is exclusively from one donor, or from his/her spouse or issue who were living on the date of the original donation, or from any trust settled by the donor or if the donor is a corporate body from another corporate body belonging to the same group as the donor and which was in existence on the date of the original donation.